November 2001 | Commentary | Viewpoint

Paying Attention to the Whole Logistics Package

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Lance Armstrong doesn't know it, but when he won the Tour de France this year, he provided a powerful business parable for our times. His come-from-behind victory demonstrated an important, but often overlooked, competitive concept: No matter how impressive your start, you must have a strong finish to win the race.

Nowhere is this more evident than in the "inconsequential" process we call small package delivery. Few of us have any choice about outsourcing this key business function. However, we make a potentially lethal customer service error—and miss out on a unique competitive advantage—if we assume that our work is done once our packages are turned over to our carriers of choice.

Who Takes the Blame?

My main reason for saying this is simple: Package carriers are anything but perfect.

Each time a package carrier has a delivery lapse with one of your customers, you're the one who risks losing a customer. That's a huge price to pay considering it costs an estimated $40 to acquire a customer. And that doesn't even begin to factor in what you pay for customer service. Nearly 20 percent of all incoming customer service calls are from people who want to know where their shipments are. You've got to believe that a good many of those calls come from people whose promised delivery dates came and went.

For these reasons, your company should consider taking a more active role in managing the packages it sends. Specifically, you should try to ensure that carriers are delivering packages as promised—and take swift customer service action when it appears that's not going to happen.

Here's just one example of how that might work.

At 9 a.m. on Dec. 1, you receive a small order that's most appropriately shipped via small package carrier. You fill that order, shipping it out that afternoon via your carrier of choice. Then you notify the customer to expect delivery between Dec. 4 and Dec. 6.

This is ordinarily the time when most companies would consider their work done. Your company, however, continues to monitor the progress of the package through the carrier's delivery stream.

On Dec. 5, you see that the package still hasn't reached the carrier's local terminal, a sure sign that it won't be delivered within the promised timeframe. You immediately call your customer to let him know the package will be late. Perhaps you even decide to send the customer another package via overnight delivery with no charge for shipping.

Throughout this process, you've sent some very important messages to that customer—you're in control, you care, you're quality conscious, and your company stands behind its products before, during, and after the sale. You've also probably earned yourself a more loyal customer.

Some people may argue that such above-and-beyond measures are redundant. As evidence, they point to the fact that many package carriers already have multi-million-dollar tracking systems, and that customers can do their own package tracking via those systems.

These critics forget that most people today are time-challenged. The last thing they want to do is babysit their packages. They also forget the laws of common courtesy: Letting a customer find out about a late shipment the hard way deprives him of the opportunity to make alternate arrangements—something that's especially important for emergency or special occasion purchases.

Finally, they forget the fundamental difference between a commodity and a brand. One is replaceable. The other is not. If you believe that your company exists merely to manufacture or sell products, than maybe your work truly is done when you send packages out.

If your objective is to build a successful brand, however, you cannot relinquish your responsibility for any part of the logistics process until that order crosses the finish line.

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